Megatrends

The most influential Megatrends set to shape the world through 2030, identified by Euromonitor International, help businesses better anticipate market developments and lead change for their industries.

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In 2017, the government continued to increase excise rates for all categories of tobacco. For quite new categories in Russia, such as e-liquids containing nicotine, single use cig-a-likes and heated tobacco, excise taxes were introduced for the first time.

Heated tobacco records the strongest growth in 2017

Heated tobacco recorded the strongest retail value growth in 2017. In 2016 Philip Morris International enjoyed a monopoly with its HEETS and Iqos brands, but in 2017 British American Tobacco-SPb launched its Glo brand.

Japan Tobacco acquires Donskoy Tabak

The increase in excises and, as a consequence, the growth of the illicit trade, the continuing consumer emphasis on saving and the reduction of smoking prevalence remained the main factors in the tough competitive environment in cigarettes in 2017. In these conditions, players use various tools to increase their share.

No significant changes in distribution of tobacco in Russia in 2017

Independent small grocers remained the leading distribution channel for cigarettes, whilst tobacco specialists continued to lead in cigars, cigarillos and smoking tobacco in Russia in 2017. In support of cigarettes, the development of food/drink specialists should also be noted due to the growing popularity of the Krasnoe i Beloe retail chain.

No positive changes in retail volume sales expected over the forecast period

The government policy of increasing excise taxes, as well as the existing measures aimed at reducing smoking, will likely negatively affect the entire tobacco market in Russia over the forecast period. This is set to particularly affect cigarettes, as will increases in the illicit trade of cigarettes and a decline in smoking prevalence.

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